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Technology Stocks : TAVA Technologies (TAVA-NASDAQ) -- Ignore unavailable to you. Want to Upgrade?

To: Manzanillo who wrote (28885)	2/24/1999 8:31:00 PM
From: Karl Drobnic	Read Replies (4) \| Respond to of 31646

Estimating the Post Office Contract: Firstly, it struck me as strange that publicity-cautious TAVA would re-announce the USPS engagement. That points to it being very "material" indeed, given that TAVA has major engagements with the likes of Coke and Chevron. So if it's material enough to get JJ excited, how material is it? WR dug up an announcement by CSC a few days ago that provides a starting point, a $198 million, 9 yr. contract to fix up the Post Office's payroll procedures. So I reasoned thusly: The USPS has been streamlining operations for years, and has gone from a major money loser to...better than it used to be. So there must be some relationship between payroll and automation. Otherwise, financial performance at the USPS would not have improved. So I arbitrarily set 70% as a reasonable guess, leaving a 30% fudge factor. Then I divided CSC's $198 million by 9 years, getting $22 million/yr. I noted that there are 4 partners splitting the payroll contract, so I divided by 4 and got $5.5 million. Then I put in my error factor, multiplying by .70. The result is an estimate of $3.85 million for the TAVA/USPS contract. I'll be the first to point out that this is an academic exercise. It's value is that it provides a baseline where none was otherwise provided. And I see little reason for TAVA to get excited about something smaller than the above given that they are already turning away work, and only taking on clients that will have meaningful impact into the post-Y2K future.